Although SA's banks and mobile operators have not shone in the mobile money sector when compared to other African countries - where business is booming in this department - there are several signs indicating the country is in for an upward shift.
This comes amid growing industry optimism and the imminent re-launch of SA's biggest mobile player, Vodacom's, mobile money offering: M-Pesa.
Just last month, second operator MTN celebrated what it says was a major milestone for the company in mobile money. After what had been at the time a nine-month journey from the launch of MTN's cellphone-based bank account service Mobile Money, the operator announced it had opened over one million accounts, and processed over R1 billion in transactions.
Having previously conceded Vodacom's three-year-old M-Pesa product has not managed to gain traction in SA, CEO Shameel Joosub said in May that the mobile money offering would be re-launched on a new IT platform that would interface directly into banks "in the next few months". He said Vodacom was also looking into expanding the distribution channel to add on more points of sale.
Filling a gap
Yolande van Wyk, CEO of eWallet solutions at First National Bank (FNB), says - despite the bad rap the mobile money market in SA has had up until now - there is not only a need for it in the country, but all signs point to the service climbing up the ranks, not declining.
She says, as of June this year, FNB's eWallet solution (launched in October 2009) had 1.8 million users. "There are about 2.5 million eWallet users across SA, Botswana, Zambia, Namibia, Lesotho and Swaziland, and about R6.5 billion has been sent across eWallets in these combined."
Van Wyk says where Africa as a whole is at a disadvantage is in that mobile money on the continent is largely defined at the level of the network operator - while there is a continuum of financial services available. "Mobile money is predominantly tied up in the operators, with banks playing a supporting role. Has it been a flop in SA? No - but then it depends on how you look at it. Theoretically, cellphone banking could be classified as mobile money."
Notwithstanding that dynamic, she says mobile money fills a gap in SA. "The service is a solution for people with intermittent income who are not banked, and it allows for the transfer of money without people having to have physical interaction with the bank.
"It is a core service for South Africans and the concept has been proven in the country. Whether mobile money will ever overtake banking as we know it, that I can't say, but it is a valid product with great potential."
She says eWallet in SA is seeing consistent growth.
Upward trajectory
John Campbell, head of Standard Bank's innovation hub Beyond Payments, says the bank's Instant Money service - launched three years ago - is "still in a steep growth phase".
In 2012, the monetary value of transactions seen through the service was in excess of R12 billion. Standard Bank has about 10 million retail banking customers in SA, more than two million of whom are registered users of Instant Money.
"It's not an account-based product, so it's very different from a conventional account. Account-based Standard Bank customers can use Instant Money through most Standard Bank channels such as ATMs, Internet banking and access points. Generally, the sending party to remittance transaction is banked and the recipient unbanked."
Campbell says there is "definitely" a strong case for mobile money in SA, despite relatively better growth seen in the country's African counterparts. "It's a great mechanism for providing basic financial services to customers who are still unbanked, and bringing them into the formal banking sector."
The main need driving the service among South Africans is that of money remittances from urban to rural areas. "Instant Money is also used to settle daily transactions to unbanked merchants in markets using products such as the SnapScan app. In Mxit and Facebook, customers use Instant Money to send money to each other through the instant messaging platform."
Customer convenience
Adrian Vermooten, head of payments and digital channels at SA's largest bank by customer numbers, Absa, says CashSend (started in late 2008) is still seeing growth - and further progress is expected as retail chain Pep has introduced its Pep Money Transfers service, which is powered by Absa's mobile money technology.
Absa's CashSend service is available to all Absa customers and does not require the customer to sign up for the service, notes Vermooten. "CashSend allows customers to send money across the country to anyone with a South African cellphone number, whether they have bank accounts or not.
In 2012, Absa facilitated over R1 billion in CashSend transactions.
Vermooten says the case for mobile money in SA is steeped in the need customers have for convenience. "Mobile money is an important part of the customer journey."
He says Absa's CashSend service has "changed the payments industry significantly".
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